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Aged care and financial planning

The costs of aged care services can be difficult to navigate if you’ve never been through the process before, but planning ahead can help you to live a more comfortable life in retirement and feel better prepared for the future.

Last updated: December 17th 2021
Understanding the costs of different types of aged care is important when financial planning. [Source: Shutterstock]

Understanding the costs of different types of aged care is important when financial planning. [Source: Shutterstock]

Key points

  • Planning for the cost of aged care can help you to feel secure financially
  • Costs differ greatly between the types of aged care and individual circumstances
  • Engaging a financial advisor can reduce the challenges of financial planning

There are some things you should know about expected costs and how these differ across retirement villages, in home care and residential aged care.

Call now for an obligation-free chat regarding Financial Services options for you or your loved one with a financial services expert.

Retirement living

The first cost of moving into a retirement village is a deposit, which you will need to pay before you move in.

You will then either pay an entry payment for a leasehold, which is usually set at the market value of the property, or a purchasing price if the home is a strata, community or company title. Researching the places where you might like to live can give you an idea of specific figures.

Don’t forget that because you are purchasing a home, there will be stamp duty and Government costs added.

Ongoing monthly fees to cover the maintenance, staffing, utilities and insurance costs are also charged in almost every retirement village and differ depending on what services are offered.
You can read more about the costs of a retirement village here.

In Home Care

If you need support to live at home, you might be able to get help through the Commonwealth Home Support Programme (CHSP) for basic levels of care, or a Home Care Package (HCP) for more intense support.

Both of these programs are funded in part by the Government, but you are usually expected to pay an income tested contribution.

Some support providers will also charge a basic daily fee and this will be added on top of funding provided by the Government, so you will have more money for care.

You should understand the level of care you need and how much you will be charged before you can add these costs into your financial planning, as they differ a lot between individuals.
Our home care package fee estimator can give you a guideline around the costs of a Home Care Package for you and your specific situation.

Residential aged care

Residential aged care has three main costs – the basic daily fee, means tested care fee and accommodation fee.

The basic daily fee covers the cost of services like food, laundry and cleaning.

The means tested fee is for the cost of your personal and clinical care services, which is charged based on how much you can afford to pay. If you can’t afford it the Government will cover the fee for you.

The accommodation fee is the cost of your room and is different in each home as well as being dependent on the location and size of the room. The accommodation fee can be paid as a refundable lump sum before you move in, a daily payment or a combination of a lump sum and daily payment.

As the daily payments are not refundable, you may want to plan ahead to pay the full cost of the accommodation fee up front.

If you are likely to need high level care as you get older, or you simply like the idea of living in an aged care facility, you should start planning as soon as possible to have the right financial strategies to fund this type of aged care. You may be able to afford to choose luxury type extras if you plan ahead – which are paid for through an extra services fee.

Our nursing home fee estimator can give you a guide to residential aged care costs which you might expect to pay.

Financial advisors

Financial advisors are professionals in financial services who are required by law to have your best interest at heart. They understand the systems and rules and how to make them work for your individual circumstances.

Your financial planner can give you financial advice on how to arrange your finances and cash flow so that they last your lifetime and cover your aged care fees, but they can also help with an Age Pension application.

Learn more about what a financial advisor can do for you here.

Have any other questions about financial planning for aged care? Ask us in the comments below.

Related content:
Understanding aged care costs
Planning for a secure retirement

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